Bank of America Corp and the U.S. Department of Justice have reached an impasse in negotiating a multibillion-dollar settlement related to the bank’s mortgage investments, the New York Times reported citing people briefed on the matter.
The talks stalled on Monday after the bank’s latest offer of more than $12 billion to resolve state and federal investigations into its sale of mortgage investments fell far short of prosecutors’ demands, the newspaper said.
On Tuesday, as Bank of America sought to continue negotiations, the Justice Department moved to put the finishing touches on a civil complaint against the bank, the report said, citing the people.
The lawsuit, which is not imminent, is expected to accuse the bank of selling mortgage investments that led to billions of dollars in losses.
Reuters reported in April that Bank of America said in an annual regulatory filing that a U.S. Attorney’s office advised the bank it would recommend the Justice Department bring a civil case against its affiliates over mortgage bonds.
The second-largest U.S. bank faces multiple government probes over the underwriting, sale and securitization of residential mortgage bonds before the financial crisis.
Bank of America spokesman Lawrence Grayson declined to comment on the report. Representatives for the DoJ did not immediately respond to emails seeking comment outside regular U.S. business hours.